RUSSIAN COMPANIES HOPE TO PROSPER IN SYRIA

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MOSCOW (RIA Novosti political commentator Marianna Belenkaya) - By late April, Russia and Syria should draft an intergovernmental agreement on the use of Syrian debts.

During a visit made by President Bashar Assad to Russia, the sides agreed that the remainder of the debt ($1.5 billion), after Russia wrote off a part of the aggregate, would be repaid within ten years, and another $2.12 billion would be converted into Syrian liras. The latter sum was to be transferred to Russia's account with the Bank of Syria, for use by Russian companies during investment projects in that country. The list of projects and facilities where Russian businessmen can work will be included in the agreement on the debt settlement.

This will help reduce investment risks and serve as another impetus for launching major long-term projects in Syria, said Vladimir Fomichev, head of the department for cooperation with the Middle Eastern and Southeast Asian countries at Neftegazexport. According to him, Russian businessmen's enthusiasm was fueled by the settlement of part of the debt and Assad's visit to Moscow. The next task is to start implementing the agreements, because the enthusiasm will wane if there is too long a pause.

Boris Vishnevsky, the director for Africa and the Middle East at Technopromexport, hopes that the debt settlement agreement will take into account the requirements of Russian companies. "It is a pity that the conditions that could boost easy progress of Russian organizations to the Syrian market were not formalized at the initial stage, when the decision to write off debts was made," he added.

RIA learned in SoyuzNefteGaz that "the settlement of the debt problem is designed to set in motion the frozen Russian money of our Syrian partners." A company spokesman said, "The investment of the remainder of the debt into coordinated projects will enhance their economic profitability and create additional tools for their implementation. On the whole, this will help speed up the dynamics of bilateral cooperation."

He also said, "The meeting between the Russian and Syrian presidents in Moscow outlined interaction priorities and timeframes. This allowed the business associations of the two countries to formulate a cooperation program for the next few years." Besides this, during the Russia-Syria summit in Moscow, Russian oil and gas companies signed cooperation agreements on several major projects whose implementation may begin in the second half of 2005.

Proof of the positive results of Assad's visit and the settlement of the debt problem was provided during a session of the bilateral intergovernmental commission on trade, economic and research-technical cooperation, held in Damascus in early April. According to sources in the Russian Economic Development Ministry, "the sides displayed considerable interest at the session, largely owing to the prospects created by the settlement of the debt problem."

The sources added, "the fact that the next meeting of the commission's co-chairmen is to be held in Moscow in September 2005 confirms that the sides are ready to cooperate. If acute problems or burning questions arise in the meantime, they will be settled promptly."

The ministry sources also think that if all agreements reached during the commission's session are implemented, Russia-Syria trade may reach $1 billion, the goal set during the session in Damascus. The most promising spheres of cooperation are oil and gas, electricity, irrigation, water use, and tourism.

Russian companies are also upbeat about the session. Vladimir Fomichev of Neftegazexport thinks it could give a major boost to bilateral economic relations. "There are objective prerequisites in Syria that can encourage the work of [Russian] oil and gas companies," he said, meaning considerable reserves of hydrocarbons and the experience of bilateral cooperation. His company hopes to sign contracts on the development of fields and drilling. The Syrian side also expressed interest in improved oil production technologies and cooperation in seismic surveys. In short, there are good prospects for cooperation with Syria.

The sides also settled one problem that hindered the return of Russian companies to Syria: the shortage of Syrian financing for major projects. According to Fomichev, allocations were 20-30% below the average level of funds for similar projects in other countries. Naturally, Russian companies could not work at a loss or in a manner detrimental to quality. Fomichev believes the situation has now changed.

Technopromexport experts completely agree. "We waited nearly 20 years for Syria to see that more funds should be allocated to the construction of major facilities," said Vishnevsky. "We are talking seriously now." He pointed out that the minutes of the recent session of the intergovernmental commission enumerated prospective cooperation projects, such as the Halabia & Zalabia major irrigation complex and the Tishrin thermal power plant.

As for investment, everything depends on the sector, said Vishnevsky. All power-generating projects are capital-intensive and are part of the state sector in Syria, which is why direct investment is impossible. Hence, it is the Syrian government that should finance them.

The oil and gas industry is quite another matter. According to SoyuzNefteGaz, "Russian companies plan to invest as much as $100 million in Syrian oil and gas projects in the foreseeable future."

It is more difficult to speak about trade, as some Russian businessmen think $1 billion is a feasible goal, whereas others are only ready to speak for their respective sector. Vishnevsky said, "The cost of energy and irrigation facilities listed in the minutes of the intergovernmental commission's session are worth hundreds of millions of dollars. If all of them are implemented, bilateral trade will soar."

He added in conclusion that the session and the talks between Technopromexport and its Syrian colleagues showed the Syrian side was ready to work with Russia. "We respected each other as partners 20 years ago and I hope this feeling will live on," he stressed. Other Russian companies share this view.

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